"Add to this the fact that software development projects can achieve similar results even if two projects were to differ in allocated budgets by a magnitude of 10 times, and you can understand how ASW does it so cheaply. (CPUs tech team doesn't have the greatest reputation in the industry)"
"ASW is a small nimble and very focussed player run by the founder with a big stake in the business. CPU has become bloated, distracted and complacent over the decades and their brand and high switching costs has largely afforded them this luxury. A testament to how good the economics of this business can be once you get a foothold."
Perhaps a testament to the limitations of viewing the world through the lens of Porter's Competitive Strategy? Someone once said they want to invest in a business that can be run by a ham sandwich. But I don't know. The ham sandwich won't kill you, but the rot that can set in around it, a la bureaucracy, complacency and inefficiency, will not do you any good. But it's not the ham sandwiches that one really needs to worry about, its the pro-active but poorly incentivized or inept managements that will kill you. Take Woolies for instance. A once apparently unassailable competitive advantage, a monstrous ROE on its Australian supermarket business, but the bulk of its capital had become tide up in mediocre ROE activities (look at NZ supermarkets, breathtakingly low ROE). But, because the whole had an ROE that still looked good, management didn't mind. No ham sandwich would ever have achieved that.
For me, one ignores culture and character, at ones peril.
ASW Price at posting:
77.0¢ Sentiment: None Disclosure: Not Held
